If the price is right, it will sell -- and it looks like Amazon is taking this philosophy very seriously
By Ed Oswald (ComputerWorld)
The fire sale of the HP TouchPad (and the resulting rush to snag the tablet) proved one thing: if it's cheap enough, they will come. This could be good news for Amazon, who reportedly plans to release its own tablet in late September/early October for "hundreds less" than the iPad.
Sources told the New York Post that the e-tailer plans to sell the device for "hundreds less" than the iPad, although they didn't specify a target price. It seems as if Amazon wants to sell more hardware first, and then hope to make up the difference in the sales of content later.
In industry speak, this is called a "loss leader " because the product is sold for less than it costs to manufacture the device. Amazon hopes that consumers will spend more in its digital content stores as a result of getting the hardware itself cheaper.
Whether that strategy will work in the tablet sector is up for debate, but it's worked in the video game market for years.
If true, the market strategy presented by the New York Post is helping to flesh out the picture of a device that we still don't know much about. Based on reports, the Amazon tablet is expected to run Android 3.2 with a nine inch screen, slightly smaller than the iPad's 10.1-inch screen but significantly bigger than the Tab's 7-inch screen.
Amazon may release two versions of its tablet: a dual-core processor model for the average consumer, and a more powerful quad-core device for the power user. Other than that, we don't know much, because the company has shared little about its tablet plans (other than telling us to "stay tuned").
Regardless of the specs, as long as it's comparable to the iPad, Amazon's apparent decision on pricing will pay off. Look at the TouchPad: it was inferior to the iPad in power (and some may argue software), and still sold like gangbusters when the price was right. Imagine a tablet that is closer to the iPad in specs -- how could it not sell well?
The coming price war on tablets will benefit everybody. I'm willing to bet that Apple will even join in and possibly bring the cost of the iPad down a bit, too. Let's remember the company had about a year head start on everybody, so its manufacturing costs have likely fallen to a point where it could drop the price and still make a hefty profit.
I think it's a perfect time for an iPad price drop. Just in time for the holiday season. That could make things very interesting.